The Impact of Corruption Investigations on Stock Price Crash Risk: Evidence from the Crackdown on “Tigers” in China

Chao Yang, Qizhi Tao, Jiangze Du and Stephen Gong

Emerging Markets Finance and Trade, 2021, vol. 57, issue 15, 4261-4271

Abstract: Using data on corrupt senior officials in China, we find that corruption investigations significantly increase the stock price crash risk for listed firms located in the provinces where the senior officials formerly worked, and the impact is positively related to the officials’ political level. Channel tests find that corruption investigations increase negative news, which results in an increase in crash risk. Additional tests document that state-owned enterprises and politically connected firms experience lower crash risk, and the impact is more significant in more-developed provinces. In addition, we find that firms directly associated with investigated officials experience negative cumulative abnormal returns.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2020.1859367 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:57:y:2021:i:15:p:4261-4271

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2020.1859367

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().